CapitaLand to develop 2nd Raffles City project in Shanghai

SINGAPORE: CapitaLand said that it is set to develop its second Raffles City integrated development in Shanghai.


It is the seventh Raffles City project in China.

Raffles City Changning, as the development has been named, will be located in Shanghai's Changning District, near the Hongqiao Transportation Hub, according to the announcement.

The integrated development will consist of a Grade A office tower and a shopping mall. In addition, CapitaLand will also develop commercial apartments and small-office-home-office (SOHO) units for sale, the firm said.

The entire project will cost around RMB8.1 billion (S$1.6 billion) and is scheduled to be completed in phases from 2014.

"The Changning area is centrally located and enjoys high pedestrian traffic. Our Raffles City brand is well-positioned to benefit from China's continued strong economic growth which is projected to be about 10 per cent in 2011," said Mr Liew Mun Leong, president and CEO of CapitaLand Group.

CapitaLand has partnered with strategic investors including an established institutional investor, a pension fund and CapitaMalls Asia Limited to develop the 60,845-square-metre site.

Its subsidiary CapitaLand China will partially divest 73 per cent of its interest in Senning Property to the three partners for S$759 million, which takes into consideration the site's value of RMB5.34 billion (S$1.06 billion). The transaction will give CapitaLand a net gain of around S$132 million, the company said.

The institutional investor and pension fund will hold a 55 per cent stake in Senning while CapitaMalls Asia and CapitaLand China will have an 18 per cent and 27 per cent stake, respectively.

"Divesting a partial stake in Raffles City Changning is part of CapitaLand China's ongoing strategy to further enhance its capital productivity," said Mr Jason Leow, CEO of CapitaLand China Holdings.

"We continue to retain a significant stake in the project and will be the lead development manager for Raffles City Changning," he added.

Raffles City Changning in Shanghai will be the ninth property under CapitaLand's "Raffles City" brand. The other two are located in Singapore and Bahrain.

-CNA/ac